The SEC’s Office of Compliance Inspections and Examinations’ exam priorities include issues arising from the continuing convergence of the broker-dealer and investment adviser professions. Other OCIE priorities include registrants’ use of technology; applying its “presence exams” to investment advisers who have never been examined; and reviewing the JOBS Act. Presence exams are risk-based reviews of… Continue Reading

The SEC’s Division of Trading and Markets has issued guidance on the exemption from the broker-dealer registration found in Title II of the JOBS Act. The JOBS Act directed the SEC to revise its rules to provide that the prohibition against general solicitation or general advertising will not apply to offers and sales of securities… Continue Reading

The SEC’S Office of Compliance Inspections and Examinations announced its examination priorities to highlight areas of “heightened risk” for registrants. See http://www.sec.gov/news/press/2013/2013-26.htm.). The OCIE also disclosed areas of emerging risks for registrants, as well as topics to consider the priorities. Generally, these priorities apply to all registrants as well as specifically to OCIE’s investment adviser… Continue Reading

The Securities and Exchange Commission’s Division of Trading and Markets assured two entities that, if they sought accredited investors for start-up companies they would not risk enforcement action by failing to register as broker-dealers under the Securities Exchange Act of 1934 Section 15(a)(1). See FundersClub Inc. SEC No-Action Response, avail. 3/26/13. In granting registration relief,… Continue Reading

The SEC’s Division of Corporation Finance will consider a bar on so-called “bad actors” from private offerings before announcing rules on crowdfunding under the JOBS Act. However, we anticipate there will be an additional delay given the turnover at the SEC and the recent departure of its Corp Fin Director. As you have undoubtedly heard, the SEC has… Continue Reading

The SEC’s Division of Trading and Markets released guidance on the JOBS Act’s elimination of restrictions on analyst communication and research reports concerning initial public offerings of emerging growth companies. The real quandary that the guidance addressed was related to the Elliot Spitzer settlement between regulators and major investment banks announced in 2003. This settlement required strict firewalls… Continue Reading

Despite some strenuous objections, the SEC agreed to propose a rule to lift the ban on general solicitation and advertising for certain private offerings as required by the JOBS Act. The JOBS Act required to the SEC to allow Securities Act of 1933 Rule 506 issuers to broadly market their securities so long as the securities were purchased… Continue Reading

An intriguing phenomenon has occurred. Regulators have recently noticed that there is a sharp rise in Internet crowd-funding sites. Ironically, the SEC still has not promulgated rules for allowing small businesses to raise capital online. The SEC believes that those rules are months away. Nonetheless, regulators estimate that there are almost 9,000 websites already dedicated to… Continue Reading

As my regular readers (hi mom!) know, I’ve spent a lot of time blogging about Crowdfunding under the JOBS Act. They would also know that this equity-offering form of Crowdfunding is different from the crowdfunding used by Kickstarter and Indiegogo, where artists and inventors raise money from crowds of donors, rather than investors. A quick overview… Continue Reading

In a not so surprising development, the SEC announced that even SEC registered broker dealers may not act as a crowd funding intermediaries under the JOBS Act because the SEC has not adopted regulations. Crowd funding allows companies to finance new businesses by accepting and pooling donations of up to $1 million over the Internet if… Continue Reading

The SEC’s Chief Accountant announced that a number of companies may be unaware they fall under the disclosure requirement for Emerging Growth Company status under the JOBS Act. As a result of this status, the JOBS Act requires these companies to disclose such a status in their public filings with the SEC. This disclosure and the resulting status… Continue Reading

Yesterday, the SEC proposed rules to implement Section 201(a) of the JOBS Act, which mandates the elimination of the prohibition against general solicitation in Rule 506 and Rule 144A offerings. The proposed rule answered the major questions securities professionals were asking about these reforms: would the new Rule 506 replace the old (no), would “reasonable… Continue Reading

In recent days, industry and investor advocates have been fighting over the general solicitation and advertising exemptions in private placements that went into effect with the JOBS Act. Further, these advocates are also discussing the definition of the accredited investor standard. Investor groups are looking to tighten these standards while industry advocates are seeking flexibility. … Continue Reading

It’s a rare day when I can say, with unadulterated smugness, “I was right.” So today is doubly rare, as I can say it twice. Manchester United – the world’s most valuable sports team, adored by estimated 659 million fans, winner of numerous Premiership titles, FA Cups, and Championship League titles– is going public. In… Continue Reading

In a move that surprised absolutely no one, SEC chairwoman Mary Schapiro stated in testimony before a House Subcommittee that the SEC would not make the July 4th deadline set by Congress to amend Rules 506 and 144A. Mary was not quite contrary here – I don’t think anyone expected the SEC to make this deadline (And… Continue Reading

It’s been two months since President Obama signed the JOBS Act into law (ironically, the jobs data since then have been less than great). My, how time flies when you watch every move the SEC’s Division of Corporate Finance makes! Or, in this case, doesn’t make. As you might recall, some of the JOBS Act’s… Continue Reading

I did another interview with LXBN TV this afternoon. In some ways, it went better than the first. Instead of an opening shot where I look like I’m trying to find the fastest escape route out of the imminent stammer-fest, now I just look really, really sad, like someone just yelled at a puppy. And instead… Continue Reading

Big news out of Europe today (besides fears of a Greek exit from the Euro returning like a slasher flick monster that just won’t die): Michel Barnier, the EU’s top financial services regulator, is pushing for binding Say-on-Pay. Barnier wants to give shareholders the power to curb “morally indefensible” pay. This change would impact publicly… Continue Reading

Fox Rothschild just issued another Corporate Alert on Crowdfunding. The first was written by Michael Harrington, and I helped him with our latest. These are just a few in a series we have planned on the JOBS Act, so stay tuned. I’ll post links to all of them on the Securities Compliance Sentinel here. Unlike… Continue Reading

The SEC issued an alert intending that firms detect and prevent unauthorized trading in brokerage and advisory accounts. This release related to certain risks the SEC’s Office of Compliance Inspections and Examinations found in its investigations and examinations. OCIE had reports of unauthorized trades and rogue trading by traders, portfolio managers, brokers and others. The… Continue Reading

The SEC and CFTC launched a working group to discuss and identify money laundering vulnerabilities. These issues have lingered for awhile. Both agencies believe that there is an opportunity to clarify their positions relating to money laundering and if their programs could potentially uncover such events. This group will also include representatives from the Treasury… Continue Reading

Recently, the SEC announced that it would take steps to bar felons and bad actors from any Regulation D offering. This rule was mandated by the Dodd-Frank Act, and the SEC issued the proposal last May 2011. This new rule may be in place before the end of this year, but there is no certainty… Continue Reading

In late February, a judge from the United States District Court for the Southern District of New York approved a settlement where a former executive and analyst cooperated with the SEC in a widespread insider trading investigation. The SEC agreed that, given the cooperation, there was no need to impose a small penalty. As such,… Continue Reading